In brief - HomeBuilder Grant Australia - applies to owner occupiers who are prospective buyers of house and land packages or off the plan apartments - contract must be signed by 31 December 2020
Residential developers are seeing a major uptake in enquiries and signed contracts, as a result of the Australian Government HomeBuilder Grant program announced on 4 June 2020. Importantly, the grant also applies to the purchase of house and land packages and off the plan apartments, provided that construction commences within 3 months of the contract date, and had not already commenced on or before 4 June 2020.
HomeBuilder is a time-limited $25,000 Federal Government grant program aimed at assisting the residential construction industry to bounce back from the covid crisis. The grant will be processed by the relevant state government and once implemented, will be backdated to 4 June 2020. Information regarding the grant is subject to change and should be checked against the Federal Treasury website.
There are a number of pre-conditions to qualify for the grant, including income; citizenship; property value; fair market price and timing. The grant does not apply to properties being acquired for investment purposes.
The program conditions include a requirement to enter "into a building contract between 4 June 2020 and 31 December 2020", with construction to commence within three months of the contract date. There is currently no sunset date for completion of construction.
Examples of the application of the grant include "house and land contracts", "contracts to renovate", and "off the plan apartments".
An example given in the relevant fact sheet is:
First home buyer Rebecca decides to purchase an off-the-plan apartment
First home buyer Rebecca enters into a contract to purchase an off-the-plan apartment valued at $550,000 on 6 October 2020.
Rebecca's bank applies on her behalf to the relevant State or Territory State or Territory to receive the HomeBuilder $25,000 grant. The State or Territory conducts the eligibility checks and reviews Rebecca's application documentation. The State or Territory confirms that Rebecca is an Australian citizen, over the age of 18, has a taxable income under $125,000 based on her 2018-19 tax return and the value of the off-the-plan apartment is under the $750,000 contract price cap.
As Rebecca is a first home buyer, she may also be entitled to their State's first home owner grant and stamp duty concessions as well as the Commonwealth's First Home Loan Deposit Scheme and First Home Super Saver Scheme.
The payment is to be made to the buyer after settlement as arranged between their bank and relevant state government office (likely to be the office of state revenue or equivalent).
At the time of writing, the websites for the NSW, Qld and Vic revenue offices state that information on how to apply for the HomeBuilder grant will be published as soon as it is available.
Outstanding issues to give market certainty
HomeBuilder will be implemented through a National Partnership Agreement and is currently being considered by all states and territories.
There are a number of issues which must be resolved to provide certainty to the market about whether the HomeBuilder Grant will apply in particular cases:
- Further detail on eligibility and how to apply will be made available through the relevant state or territory administrative authority when the National Partnership Agreement has been finalised. Unfortunately, this means the exact details of the HomeBuilder Grant are still being resolved and are subject to change
- There is an overall lack of defined terms in the package. For example: the meaning of "building contract"; "construction must commence"; "principal place of residence"; and "fair market price". There is also no clarity about what happens if there are delays in the commencement of construction beyond the control of the parties
- The currently available information is limited to a fact sheet and a FAQ document on the treasury website
Stay tuned to our LinkedIn channel for further updates on how these questions will be resolved, and other developments around the HomeBuilder Grant and its roll-out.
|Alan McKernan||Bob Miljevic||Rhett Oliver|
|Colin Biggers & Paisley|
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.